China produced 72.01 million mt of pig iron and 87.66 million mt of crude steel in November, up 4.7% and 8% on the year, respectively, according to data released Dec. 15 by the National Bureau of Statistics. Through January-October, China's pig iron and crude steel output increased 4.2% and 5.5% on the year at 812.9 million mt and 961.16 million mt, respectively.

          S&P Global Platts estimated China’s crude steel output to increase 5% on the year at 1.045-1.05 billion mt in 2020, and by 2.2% on the year at 1.068-1.073 billion mt in 2021.

          The daily pig iron and crude steel output in November fell 2.3% and 1.8% on the month, respectively, mainly as demand for construction steel shrank in the winter season, and output controls were ordered to tackle air pollution in northern China.

          Daily pig iron and crude steel output in December might be similar to November because while long steel producers are likely to gear down production amid low demand and thin margins, flat steel producers may keep production high as demand and margins have remained strong in December, market sources said.

          The Chinese rebar sales margin declined to $29/mt on Dec. 10 from $62/mt in mid November, but Chinese hot rolled coil sales margins improved to $86/mt on Dec. 10 from $26/mt in early November, according to Platts data.

          The bullish Chinese flat steel market in recent weeks was mainly a result of strong overseas demand for steel and steel manufactured goods, soaring iron ore prices, and inflation expectations for 2021, market sources said.

          A few sources expect overall demand for Chinese flat steel to remain strong through December. However, domestic demand has probably peaked for now, and is likely start slowing down in the first quarter of 2021, they said.

-- Analyst Jing Zhang